Japan Hotel REIT Investment Corporation
Midterm Financial Results Briefing 17th Period (FY12/2016)

August 25, 2016

(TSE: 8985)
http://www.jhrth.co.jp/en/

Table of Contents
I. Midterm Settlement of Accounts for FY12/2016 – Highlights
1． Highlights of Midterm - June 2016

Appendix １ JHR’s Characteristics

3

II. Summary of Midterm Settlement of Accounts &Revenue Forecast for the Full Fiscal Year

1. Simultaneous Pursuit of Stability and Upside Potential

28

2. Key Points to Promote Growth Cycle

29

3. External Growth Strategy

30

1.

Midterm Results for the Fiscal Year Ending Dec. 2016

5

4. Internal Growth Strategy

31

2.

Revenue Forecast for the Full Fiscal Year Ending Dec. 2016

6

5. Financial Strategy

32

3.

Balance Sheet

7

6. Benefits Program for Unitholders

33

Appendix ２ Information on Properties

III. External Growth1.

Properties Acquired through Public Offering in July 2016

92.

Continuous Property Acquisitions

11

3.

Strategic Investment Areas and Regional Diversification

12

4.

Diversification of Brands (International Brands and HMJ)

13

Rent Structures

15

2.

Major Indicators of Rooms Department of Major Hotels with Variable Rent

16

3.

The Five HMJ Hotels - Highlights

18

4.

Capital Expenditures and Depreciation

19

Financial Status
Market Environment37

3. Portfolio Map

3941

2. Changes in Investment Unit Price and Market Capitalization 42
Appendix 4 Summary of the Asset Management Company

21

VI. Market Environment
1.

2. Summary of Lease Contracts

1. Major Unitholders and Unitholders of Investment Units

V. Financial Status
1.

35

Appendix ３ Investors Composition and Investment Unit Price

IV. Internal Growth1.

1. Property List

24

Former Nippon Hotel Fund Investment Corporation (“former NHF”) and former Japan Hotel and Resort, Inc.
(“former JHR”) merged on April 1, 2012. The surviving company is the former NHF. The new name after themerger is Japan Hotel REIT Investment Corporation (“JHR”). The asset management company of JHR isJapan Hotel REIT Advisors Co., Ltd. (“Asset Management Company”).

1

1. Summary of the Asset Management Company

44

2. Features and Governance of the Asset Management Company

45

I. Midterm Settlement of Accounts for FY12/2016 - Highlights

1. Highlights of Midterm – June 2016

End of FY12/2015

36 properties / JPY225.7 billion◆ Public offering in January

2 properties / JPY24 billion (Acquisition) (*1)

◆ Public offering in July

4 properties / JPY54.3 billion (Acquisition)
HOTEL VISTAGRANDEOSAKA
JPY27 billion

2016

Hilton Nagoya
JPY15.2 billion(To be acquiredon Sep. 1)

14,163
15,356
8.4%
8,350
9,206
10.3%
The Five the b Hotels
7,852
8,580
9.3%
Total
10,82811,8089.0%
Forecast of Year-on-Year Increase in Variable
Rent, etc. for Full Year 2016
The Five HMJ Hotels

The Six Accor Hotels+JPY645M
The Five Accor Hotels +JPY517M
The Five HMJ Hotels

JPY7.2 billion

JPY4.9 billion

End of Sep. 2016 (Anticipated)

41 properties / JPY286.8 billion (Anticipated)+JPY149M◆ Launch of the first global offering◆ Issuance of the 10-year investment corporation
bonds, the longest maturity for JHR◆ Conclusion of interest rate swap contracts withnegative interest rates◆ Improvement in financial stability(End of FY12/2015  9/2016 (After the Acquisition of Hilton Nagoya)

Lower costs for interest-bearing debt

1.7％⇒1.3％(*1) Includes JPY17.3 billion of ACTIVE-INTER CITY HIROSHIMA.
(*2) The Five HMJ Hotels are Kobe Meriken Park Oriental Hotel, Oriental Hoteltokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, and Oriental Hotel
Hiroshima.
(*3) The Six Accor Hotels are ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis
Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, and Mercure
Yokosuka. The Five Accor Hotels are five hotels excluding Mercure Yokosuka
from the Six Accor Hotels.
(*4) The Five the b Hotels are the b akasaka-mitsuke, the b ikebukuro, the bochanomizu, the b hachioji, and the b hakata.
(*5) Regarding the numbers for Hotel Nikko Alivila and the b akasaka-mitsuke in2014, the effect of variance in the number of rooms available for sale due topartial renovations, etc. is included.
(*6) Net basis means dividend without reflecting gain on sales of properties.

3

3,356

2,975

3,000
38.1%up（net basis:
33.5% up）

2,500

98
(net basis)
2,877

2,155
1,939

2,000

1,500
14th Period
FY12/2013

Further Diversification of Financing andUtilization of Negative Interest Rates
Environment

42.8％⇒40.1％

HOTEL
ASCENTFUKUOKA

Revenuesharing

3. Strengthening of Financial BaseManagement of LTV

Hotel
Centraza
Hakata

12.8%up(net basis:
16.6%up）

15th Period 16th Period
FY12/2014 FY12/2015

17th Period(Forecast)
FY12/2016

Rising Market Capitalization and
Investment Unit Price(JPY)(JPY M)

Market Capitalization (right axis)
時価総額100,000

350,000

Investment Unit Price (left axis)
JHR投資口価格

90,000300,000
80,000250,000

70,00060,000200,000

50,000150,000

40,00030,000100,000

20,00050,00010,000006/2016-3 properties / -JPY4.7 billion (Sale in Oct. 2015)

3,500

12/2015

2 properties / JPY16.6 billion (Acquisition)

Variance

6/20152015 ◆ Public offering in JuneFirst half of
2016

(JPY)

6/20146 properties / JPY23.1 billion (Acquisition)

First half of2015

Impact of Selling 3 Properties(Unit: JPY)

12/2013◆ Public offering in January◆ Continuing high growth of RevPAR

6/201330 properties / JPY173.4 billion

12/2012End of FY12/2014

Steady Growth of Dividend(*6)

6/2012

Continuous Property Acquisitions

Improved Performance of Hotels Adopting
Variable Rent, etc.

12/2014

2. Internal Growth (*2, 3, 4, 5)

4/2012

1. External GrowthII. Summary of Midterm Settlement of Accounts &Revenue Forecast for the Full Fiscal Year

1. Midterm Results for the Fiscal Year Ending Dec. 2016
(Unit: JPY M)
FY12/2015

FY12/2016
Midterm Forecast
Previous Time(A)

Midterm Actual

PropertyComparison with
Previous Forecast

Midterm
Actual(B)

Major Causes of Variance（B）-（A） Variance① Operating Revenue – Variable Rent•

Increase in variable rent, income from management
contracts, and revenue sharing

No. of Properties

37

38

38

ー

ー

The Eight HMJ Hotels

JPY155M

Acquisition Price

198,184

239,626

239,626

ーー

The Six Accor Hotels

JPY45M

The Six the b Hotels

JPY19M

Operating Revenue

7,242

9,199

9,390

191

2.1%

Chisun Inn Kamata

JPY2M

Real Estate Operating
Revenue

7,238

9,199

9,390

191

2.1%

Fixed Rent

4,968

6,084

6,052

-32

-0.5%

Variable Rent

2,269

3,115

3,338

223

7.2%

4

－

－

－

－

NOI (*2)

6,205

7,784

8,014

230

3.0%

Depreciation

1,327

1,572

1,603

31

2.0%

1

ー

5

5

NOI after Depreciation
(*2)

4,875

6,211

6,405

194

3.1%

Other Operating Expenses

622

784

722

-61

-7.8%

4,257

5,427

5,682

255

4.7%

784

857

814

-43

-5.0%

Ordinary Income

3,472

4,569

4,868

299

6.5%

Extraordinary Loss

ー

90

90

ー

3,472

4,479

4,778

298

Gain on Sale of Real
Estate Properties

Profitand Loss on Retirement ofLoss Noncurrent Assets, etc.

Operating Income
Non-operating Expenses,
etc.

Net Income (Midterm)

6.7%② Operating Revenue – Fixed Rent, etc.
•

Decrease in utilities income*, etc.

③ Extraordinary Loss•

Repair expenses for Dormy Inn Kumamoto

JPY90M* Regarding the utilities income, about the same amount is posted as expenses for utilities.
Therefore, there is no impact on net income by a decrease in utilities income.

(*1) For detail, please refer to Midterm Financial Report for the Fiscal Year Ending December 31, 2016 (January 1, 2016-June 30, 2016) dated August 24, 2016.
(*2) Each is calculated by the following formula
NOI (Net Operating Income) = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses
NOI after depreciation = Real estate operating revenue − Real estate operating costs

5

JPY32M

2. Revenue Forecast for the Full Fiscal Year Ending Dec. 2016
(Unit: JPY M)
FY12/2015

FY12/2016
Forecast
Previous Time

ActualForecast This Time(A)

Property(B)

Major Causes of Variance

Comparison with
Previous Forecast

Annualized（B）-（A）

Variance

No. of Properties

36

41

41

41

ー

ー

Acquisition Price

225,723

286,801

286,801

286,801ーー

17,34322,09522,281

24,567

186

0.8%

17,033 Composition 22,095 Composition 22,281 Composition 24,567

186

0.8%

Fixed Rent

60.5％ 10,311 57.7％ 12,745 57.2％ 12,736 56.1％ 13,778

-9

-0.1%

Variable Rent

39.5％

195

2.1%

Operating Revenue
Real Estate Operating
Revenue

Gain on Sale of Real
Estate Properties

Composition

6,722 42.3％

9,349 42.8％

9,545 43.9％ 10,788① Operating Revenue – Variable Rent
• Increase in variable rent, income from management contracts,
and revenue sharing
The Nine HMJ Hotels
JPY96M
The Six Accor Hotels
JPY70M
The Six the b Hotels
JPY23M, etc.
② Operating Revenue – Fixed Rent, etc.
• Increase in fixed rent, etc.
JPY13M
Decrease in utilities income*, etc.
-JPY23M③ Extraordinary Loss
• Repair expenses for Dormy Inn Kumamoto
JPY90M

309

ー

ー

ー

ー

ー

14,8296.6%
2,722

18,742
6.5%
3,327

18,9186.6%
3,358

20,378
7.1%
3,615

175
0.1%
31

0.9%

* Regarding the utilities income, about the same amount is posted as expenses forutilities. Therefore, there is no impact on net income by a decrease in utilities
income.

0.9%



25

13

18

18

5

38.5%

NOI after Depreciation (*2, 3)

12,031

15,402

15,541

16,744139

0.9%

NOI Yield after Depreciation

5.3%

5.4%

5.4%

5.8%

0.0%

1,352

1,781

1,781

1,944

ー

NOI (*2, 3)
NOI Yield
Depreciation

ProfitLoss on Retirement ofand Loss
Noncurrent Assets, etc.

Other Operating Expenses

10,988

13,621

13,76014,800139

Non-operating Expenses, etc.

1,729

1,779

1,779

1,791

ー

Ordinary Income

9,295

11,841

11,98013,008

139

0

90

90

ー

ー

9,294

11,751

11,89013,008

139

1.2%

60

730

736

160

5

0.7%

9,354

12,482

12,624

13,166142

1.1%

3,144,227

3,761,907

3,761,907

3,761,907

ー

ー

2,975

3,318

3,356

3,500

38

1.1%

Operating Income

Extraordinary LossNet Income
Use of Negative Goodwill
Total Dividends
Dividend Number of Units Issued(Unit)

Dividend per Unit (JPY)+12.8%

1.0%
1.2%

Major Assumptions for FY12/2016 (*1)

Operating Assets: Forty-one properties, which is 38 properties owned as of June30, 2016, plus 3 properties (HOTEL VISTA GRANDE OSAKA, HOTEL ASCENTFUKUOKA, and Hilton Nagoya) will be owned/operated until end of the year. No
property transfer (acquisition, disposition, etc.) is assumed.

 Operating expenses: JPY1,216M for fixed asset tax and city planning tax, etc.

is assumed. The taxes of the five new acquired properties (including anticipatedacquisition) this fiscal year will not be posted as operating expenses since they will
be posted as acquisition expenses. (The fixed asset tax and city planning tax forthe five properties are posted with the assumption of JPY220M in annualized
number.)Straight-line method is applied to calculate depreciation.

 Non-operating expenses: JPY1,779M is assumed as interest payments,

amortization of loan-related fees, loan-related costs and amortized expenses for
issuing new investment units.

 Borrowing: It is assumed that the balance of loans and investment corporation

bonds as of the end of June 30, 2016 totals JPY111,558M. The amount is assumed
to be JPY125,479M at the end of FY12/2016.

 No. of Investment units issued: Assume 3,761,907 units are issued.
 Dividend per unit: Negative goodwill will be used for amortization for fixedterm leasehold of land and asset retirement obligations (JPY736M).

+1.1%(*1) For detail, please refer to Midterm Financial Report for the Fiscal Year Ending December 31, 2016 (January 1, 2016-June 30, 2016) dated August 24, 2016.
(*2) Each is calculated using the following formula
NOI (Net Operating Income) = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses
NOI yield = NOI ÷ Acquisition price
NOI after depreciation = Real estate operating revenue − Real estate operating costs
NOI yield after depreciation = NOI after depreciation ÷ Acquisition price(*3) Gain on sale of real estate properties is not included in NOI and NOI after depreciation for FY12/2015.

6

3. Balance Sheet(Unit: JPY M)
FY12/2015
End of Fiscal Year(As of)12.31.2015

FY12/2016
End of Midterm
6.30.2016

Variance

ASSETS（注FY12/2015
End of Fiscal Year(As of)12.31.2015

End of FY12/2016
End of Midterm
6.30.2016

25,073

13,717-11,356

3）
Variance

LIABILITIES AND NET ASSETS

15,633

17,8792,246

Cash and Deposits (*1)

13,698

16,205

2,507

Operating Accounts Payable

875

314

-561

Operating Accounts
Receivables

1,269

1,196

-73

Short-Term Loans Payable

9,000

8,700

-300

665

477

-188

2,500

2,500

-

224,588

240,482

15,894

11,393633-10,760

Net Property and Equipment

203,488

211,994

8,506

Accounts Payable

502

593

91

Buildings in Trust (*2)

81,66085,031

3,371

Advances Received

692

763

71

Land in Trust

120,918

125,849

4,931

Allowance for Loss on Disaster

908

1,113

204

Intangible Assets

19,88425,3005,416

Other Assets

1,214

3,187

1,973

170

170

-

1,043

3,016

1,973

135

153

18

Current Assets

OthersProperty and Equipment,
at CostOthers (*3)

Leasehold and Security
Deposits
OthersDeferred Assets

Current Liabilities

Current Portion of Investment
Corporation Bonds
Current Portion of Long-Term
Loans Payable

Others258,515

105,567

20,19912,5003,000

Long-Term Loans Payable

70,37987,224

16,845Tenant Leasehold and Security
Deposits

4,955

4,223

-732

533

1,290

757

110,442327
119,284327
8,842

Unitholders' Capital

85,470100,088

14,618

Capital Surplus

21,746

21,746-

Dividend Reserve
Unappropriated Retained
Earnings for the Period
Others13,92813,867

-61

9,296

4,780

-4,516-526
129,914-1,252
139,230

-726
9,316

240,356

258,515

18,159TOTAL NET ASSETSTOTAL LIABILITIES AND
NET ASSETS(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures, and construction in progress.
(*4) “Others” includes asset retirement obligations.

7

13

9,500

Derivative Liabilities

18,1599085,368TOTAL LIABILITIESNET ASSETS

240,356

90
122

Investment Corporation Bonds

Long-Term Liabilities

Others (*4)

TOTAL ASSETS

109

III. External Growth1. Properties Acquired through Public Offering in July 2016
HOTEL VISTA GRANDE OSAKA

Hilton Nagoya(*3)(Anticipated)
Acquisition Price

JPY27,000M

JPY15,250M

No. of Rooms

314

460

NOI Yield (*1)

5.1%

5.0%

Brand / Operator

Holiday Inn(*2) / HMJ Group

Hilton / Nagoya Hilton

Rent Structure

Fixed + Variable

Variable

Location
FeatureInvestment Strategy•

Center of the Namba area in Osaka, a popular destination for
inbound tourists••

Limited-service hotel built only 8 years ago
To be operated by the Asset Management Company’s affiliate
hotel operator•

Strategic rebranding to “Holiday Inn” to capture ADR upside in
the growing market
Seeking synergies with an existing neighboring hotel operated
by HMJ•(*1) NOI yield is calculated as annualized NOI forecast for FY12/2016 divided by (anticipated) acquisition price.
(*2) The hotel currently uses a Vista brand, but it will be rebranded to Holiday Inn Osaka Namba.
(*3) Anticipated to be acquired on September 1, 2016.
9•

Center of a business district in Nagoya, the third largest Japanese
metropolitan area•

One of only a few full-service hotels with the international brandin Nagoya•

Pursue increase in ADR based on fully renovated guest rooms andother facilities completed in March 2016
Increased guest rooms from 449 rooms to 460 rooms•

1. Properties Acquired through Public Offering in July 2016 (Cont.)
Hotel Centraza Hakata

HOTEL ASCENT FUKUOKA(Anticipated)
Acquisition Price

JPY7,197M

JPY4,925M

No. of Rooms

194

260

NOI Yield (*1)

6.5%

5.6%

Brand / Operator(Domestic) Centraza / HMJ Group

Rent Structure

Fixed + Variable(Domestic) Ascent / NIKOH SANGYO co.,Ltd.
Fixed

Location•

Directly connected to major JR Lines and Hakata airport subway
stationFeature•Mid-price full-service hotel operated by HMJ, the AssetManagement Company’s affiliate hotel operating company••

Potential ADR upside with increasing inbound demand from Asia
Pursue increase in RevPAR through guest room renovations to beplannedAttract leisure tourists by leveraging cozy room size

Investment Strategy•(*1) NOI yield is calculated as annualized NOI forecast for FY12/2016 divided by acquisition price10•

Center of the business and commercial area of Fukuoka, where a
growing number of Asian tourists visit•

Limited-service hotel with stable fixed rent•

Enhance stable earnings base of our portfolio through fixed rent
income2. Continuous Property Acquisitions
Changes in Asset Size（*）
 Realize external growth by acquiring properties by taking advantage of JHR’s strength as REIT specializing in hotels
 Acquired 21 hotel assets, around JPY177.3 billion in total acquisition price since the merger
Aim to expand
the size of portfolio
on a continuing basis(JPY M)

資産規模の純増額
Net Increase in Asset Size

300,000
250,000

225,723

200,000

173,429

158,902150,000
100,000

130,883

122,285

158,902

225,723

122,285

130,883

April 2012
(Effective Date of Merger)

FY12/2012(13th Period)

FY12/2013(14th Period)

FY12/2014(15th Period)

2

2

3

2

2

1

3

28

28

30

36

FY12/2015(16th Period)

2016
After the Acquisitionof Hilton Nagoya

95・the b akasaka-mitsuke ・CANDEO HOTELS
・Hotel Keihan Universal City ・Hilton Tokyo Bay・ibis Styles Sapporo
・the b ikebukuro
UENO-KOEN
・Hotel Sunroute Shinbashi
・ibis Styles Kyoto Station・Mercure Sapporo
・the b ochanomizu
・Hotel Centraza Hakata
・Mercure Okinawa Naha ・the b hachioji
・HOTEL GRANDE VISTA・the b hakata
OSAKA・Hotel Francs
・HOTEL ASCENT FUKUOKA
・Mercure Yokosuka
・Hilton Nagoya
・Okinawa Marriott
Resort & Spa
・ACTIVE-INTER CITYHIROSHIMA

Disposition
Total Properties

286,801

173,429

8,598
122,285

Acquisition

41
Properties
in total

52,294

14,52728,01961,07728(*) Asset size refers to the total amount of acquisition price.

1141

3. Strategic Investment Areas and Regional Diversification
 Portfolio consisting of competitive hotels in areas with strong “leisure demand”
 Focus on Strategic Investment Regions with growth potential for robust leisure demand

Total Assets

No. of Hotels

No. of Guest Rooms

JPY286.8 Billion

41 Hotels

10,138 Rooms

Strategic Investment Areas

Diversification of Portfolio (Based on Acquisition Price) (*2)

Newly Acquired (to be Acquired) Properties

Hotel Type

Current Portfolio Assets

Grade
Economy7%

JHR’s “Strategic Investment Areas”
Prefecture Ranking of InboundOvernight Stays in 2015

Hokkaido Area
3

Okinawa Area

Hokkaido

Resort hotel Limited-service
hotel
27%
45%
Full-service
hotel
28%

5 Okinawa
4 Kyoto2 Osaka

Upper-Middle
10%

Hokkaido

Chubu 4%5%

6 Chiba

Chugoku
7%

7 Fukuoka

Kyushu7%

Osaka /
Kyoto Area(*3)

Okinawa
16%

23 wards in Tokyo(*1) After the acquisition of Hilton Nagoya.
(*2) Tokyo & the Bay Area includes Tokyo, Kanagawa and Chiba prefectures.
(*3) Osaka / Kyoto Area includes Osaka and Kyoto prefectures.

Mid-price
56%

Diversification in Areas

Tokyo & the Bay
Area (*3)

1 TokyoFukuokaArea

Luxury27%

12Kanto 37%
(incl Tokyo
17%）
Kansai24%

No. of properties in strategic
investment areas / proportion

35 Hotels / 82 ％

4. Diversification of Brands (International Brands and HMJ)
 Attract inbound tourists with major international hotel brands— Strategic selection of international brands to realize full potential of each hotel
 Enhance external and internal growth through strategic partnership with HMJ, the Asset Management
Company’s affiliate hotel operating company

Others14%
Dormy Inn
(Kyoritsu
Maintenance)
5%
Choice Hotels(Comfort Hotel)
1%

the b
7%

HMJ
47%

Oriental Hotels
20%

Nikko
7%

Brands by(Anticipated)
Acquisition Price

Holiday Inn (IHG)
9%

Mercure / ibis
11%

Sheraton
6%
Marriott5%

Hilton14%

13International
Major
47%

IV. Internal Growth1. Rent Structures
Stability
Rent structure
Type of contract
Fixed
Type of rent
Variable

Fixed rent
Lease contract○-

Involvement in hotel
operation
CAPEX paid by JHR
No. of properties
Acquisition price (JPY M)（％）

HotelsUpsideFixed rent + Revenue sharing
Lease contract○
A certain percentage of sales
exceeding the threshold

Fixed rent + Variable Rent
Lease contract○
A certain percentage of
hotel GOP

Variable rent
Lease contract
A certain percentage of
hotel GOP

Management contract
Management contract
-

Low

High

High

High

Low
1)

Renewal of building
and facilities

13
42,580
14.8%
Hakone Setsugetsuka
The Beach Tower Okinawa
Dormy Inn Kumamoto
Hotel Francs
HOTEL ASCENT FUKUOKA(7 other hotels)(After the acquisitionof Hilton Nagoya)

1)

Renewal of building
and facilities< 3) Strategic investment>

540,470
14.1%
Smile Hotel Nihombashi
Mitsukoshimae
Hotel Vista Kamata Tokyo
Hotel Keihan Universal City
Hotel Sunroute Shinbashi
Hilton Tokyo Bay

1)

Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment

15
156,387
54.5%

HMJ group

Kobe Meriken Park Oriental Hotel
Oriental Hotel tokyo bay
Namba Oriental Hotel
Hotel Nikko Alivila
Oriental Hotel Hiroshima
Okinawa Marriott Resort & Spa
ACTIVE-INTER CITY HIROSHIMA
Hotel Centraza Hakata
HOTEL VISTA GRANDE OSAKA

1)

Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment

3
17,723
6.2%

GOP of hotel

1)

Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment

529,640
10.3%

Total
-

41
286,801100%

Accor group

Chisun Inn Kamata
Mercure Yokosuka
Hilton Nagoya

ibis Tokyo Shinjuku
ibis Styles Kyoto Station
ibis Styles Sapporo
Mercure Sapporo
Mercure Okinawa Naha

the b group

The Six the b Hotels (akasaka-mitsuke,
ikebukuro, ochanomizu, hachioji, hakata,suidobashi)

Real Estate Operating Revenue(Estimate for the end of December 2016 (Annualized))
JPY557M（2.3％）

Variable rent

JPY3,089M（12.6％）

Fixed rent, etc.

Total

JPY3,089M（12.6%）

JPY2,986M（12.2％）

JPY3,543M（14.4%）

JPY6,259M（25.5％）

JPY6,540M（26.6％）
JPY12,799M（52.1％）(*) Ratios of fixed rent and variable rent and acquisition price are ratios by each rent structure against total amount (rounded down to the first decimal place).

15

JPY1,303M（5.3％）

JPY2,668M（10.9％）JPY566M（2.3％）

JPY596M（2.4％）

JPY1,870M（7.6%）

JPY3,264M（13.3%）

JPY10,788M（43.9%）

JPY13,778M（56.1%）
JPY24,567M（100.0%)2. Major Indicators of Rooms Department of Major Hotels with Variable Rent
Occupancy Rate

RevPARADR

The Five HMJ Hotels(JPY)

25,00020,00016,222+11.5%

18,08615,000+8.4%

15,35622,12919,480

+4.4%

+6.7%

23,09820,782

19,212+7.6%

20,678

16,843+7.4%

18,084

60.0%

20.0%

80.0%

10,00014,163

5,000

87.3%

84.9%

88.0%

90.0%

87.7%

87.5%

First Halfof 2015
ActualFirst Halfof 2016
ActualSecond Halfof 2015
ActualSecond Halfof 2016
ActualFull FY2015
ActualFull FY2016
Forecast0

100.0%

40.0%

0.0%

The Six Accor Hotels(JPY)

15,00011,213+8.4%

12,150+10.7%

10,951

0+8.6%

11,5149,130+10.4%

10,083

9,953

+8.8%

8,350

+10.3%

9,206

9,896

83.9%

85.0%

88.3%

90.1%

86.1%

87.6%

First Halfof 2015
ActualFirst Halfof 2016
ActualSecond Halfof 2015
ActualSecond Halfof 2016
ActualFull FY2015
ActualFull FY2016
Forecast

10,0005,000

10,605

10,833100.0%
80.0%
60.0%
40.0%
20.0%
0.0%

The Five the b Hotels(JPY)
12,00010,000

4,000
2,000
0

8,842

+8.8%

9,623

8,124

+8.9%

8,846

+8.8%

9,419

9,018

+8.9%

7,852

+9.3%

8,580

8,392

+8.6%

90.7%

91.1%

93.1%

92.8%

91.9%

91.9%

First Halfof 2015
ActualFirst Halfof 2016
ActualSecond Halfof 2015
ActualSecond Halfof 2016
ActualFull FY2015
ActualFull FY2016
Forecast

8,000
6,000

9,821

8,659

16

9,110

100.0%
80.0%
60.0%
40.0%
20.0%
0.0%

2. Major Indicators of Rooms Department of Major Hotels with Variable Rent (Cont.)
Occupancy Rate

RevPAR

ADR

Three Major Group Hotels(JPY)

18,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

12,488

10,82815,547 +6.2%

13,711+9.0%

13,84911,808+7.9%

14,949+8.4%

13,387

86.1%

89.1%

90.6%

87.9%

88.4%

First Halfof 2015
ActualFirst Halfof 2016
ActualSecond Halfof 2015
ActualSecond Halfof 2016
Forecast

Full FY2015
ActualFull FY2016
Forecast

Total

6,941

+11.5%+8.8%

The Five HMJ
Hotels

4,000

The Six Accor
Hotels2,512+17.6%The Fivethe b Hotels+15.0%

Full FY2015
Actual20.0%
0.0%(The Nine HMJ Hotels + The Five Accor Hotels + The Five the b Hotels)

6,000

1,079

60.0%

Total of Three Major Group Hotels (Reference)(JPY)

10,532100.0%
80.0%

86.7%

12,000015,15140.0%

14,000

2,000

+7.8%

12,352GOP(JPY M)

8,000

14,051+9.8%

Forecast of GOP

10,00016,50620,00011,74810,000
5,000
0

2,955

Full FY2016
Forecast+8.3%

12,870+8.7%

15,794100.0%
80.0%

15,000

7,553

1,241

14,577

13,995

88.3%

88.6%

Full FY2015
ActualFull FY2016
Forecast

60.0%
40.0%
20.0%
0.0%

The nine HMJ hotels are the five HMJ hotels plus four hotels which are Okinawa Marriott Resort &Spa, Sheraton Grand Hiroshima Hotel, Hotel Centraza Hakata, and HOTEL VISTA GRANDE OSAKA.
Since Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel, Hotel Centraza Hakata, and
HOTEL VISTA GRANDE OSAKA were acquired in July 2015, December 2015, April 2016, and August
2016, respectively, numbers before the acquisitions are calculated based on unaudited data provided
by previous owners.

17

3. The Five HMJ Hotels - Highlights
Changes in Total Sales and GOP
Total Sales
23,304

Total Sales

21,13920,000GOP

21,396

21,312

20,223

6,155

15,000

7,553
+8.8%

6,302

6,000
5,500

5,158

5,136

7,000
6,500

+10.1%

5,645(JPY M)
8,000
7,500

6,941

6,296
5,696

23,186

22,29621,99424,088GOP(JPY M)
25,0005,000
10,000

CY2008

CY2009CY2010CY2011CY2012

CY2013

CY2014

CY2015

CY2016(Forecast)

4,500

Changes in KPI

86.1%

20,000

ADR・RevPAR

19,00018,00017,00016,00015,00014,00013,00012,000ADR
17,970Occupancy Rate

18,463

17,197

RevPAR

14,367

13,999

CY2007

CY200873.8%

15,98017,551

12,696

12,845

CY2009CY201015,245

16,20013,40014,886

CY2012

CY2013+9.5%

18,084

16,843

17,297

15,846

87.5%
+7.6%

80.4%
76.7%

20,67887.7%
19,212

82.7%

77.8%

77.9%

86.9%

90.0%
85.0%
80.0%

+7.4%
75.0%

+10.5%

70.0%

12,160CY201118

CY2014

CY2015

CY2016(Forecast)

65.0%

Occupancy Rate

(JPY)
21,0004. Capital Expenditures and Depreciation
 JHR will focus on CAPEX III in 2016 and invest strategically to improve hotels’ earning capability (plan)(JPY M)

3,500

(*1)

CAPEX ICAPEX IICAPEX III

Depreciation

3,358

3,000

2,772

2,500
2,212

2,242

2,322

2,214

2,297

2,400

2,885

788

2,072
1,869

2,000

1,842

1,811
36

1,500

1,000

1,306
999
668

500

0
(*2) (*3)

793

1,096

1,236

1,079
258

786

600

591

118

283

49
156

378

322

FY2006

FY2007

FY2008

90
177

233
36

516
21
213

322

281

FY2009FY2010FY2011

518

198

710

640

343
854
58
167

203
1,134

622

629

CY2012

CY20131,387

760

CY2014

CY2015

CY2016(*1) CAPEX I is capital investment related to renewal of buildings, facilities, and equipment which is required to maintain proper values of properties. CAPEX II is capital investment for fixtures and furnishings that are not directly related to building structures or
facilities but necessary for operating hotels. CAPEX III is strategic capital investment for renewing guest rooms, banquet rooms and restaurant for maintaining/improving the competitiveness of the hotels.
(*2) The actual for FY2006 is the actual of the former JHR for the period from IPO to August 2006 (6.5 months). The actual for FY2007 is the sum of the actual of the former JHR from September 2006 through August 2007 and that of the former NHF from IPO to September 2007(15.5 months). The actual for FY2008 is the sum of the actual of former JHR from September 2007 through August 2008 and that of former NHF from October 2007 through September 2008 (the same method applies for FY2009 to FY2011). The sum of CY2012 is the actualfrom January 2012 through December 2012 (depreciation is the annualized number for the 13th period), and the actual for CY2013 through CY2015 is actual number for the period from January through December each year. The plan for CY2016 for the period from January
2016 through December 2016 is based on the operating forecast in the Financial Report for the Fiscal Year Ending December 2016 dated August 24, 2016.
(*3) The former NHF spent JPY31M (from October 2011 through December 2011) and former JHR spent JPY90M (from September 2011 through December 2011), respectively, in addition to the amount indicated above.

19

V. Financial Status

1. Financial Status
Breakdown of Interest-Bearing Debt

Changes in Costs for Interest-Bearing Debt(*1) and Average Life of Debt(*2)
Average Life of Debt

As of the end of Dec. 2015

Costs for Interest-Bearing Debt

11.7%

(Year)

2.20%

2.0%

2.00%

3.3 years
1.7%

1.80%
1.60%

2.4 years

3.7 years

4.2 years

4.5 years

Loans

4.0

Investment
Corporation
Bonds

2.5

1.3%

End of FY12/2013(14th Period)

End of FY12/2014(15th Period)

End of FY12/2015(16th Period)

End of Midterm of
FY12/2016(17th Period)

After the Acquisitionof Hilton Nagoya in
Sep. 2016

1.5

As of the end of Dec. 2015

As of the end of June 2016

8.8%

0.0

Short-termLong-term (scheduled
repayment within one year)
Long-term

7.8%
2.8%

13.5%

(*) Long-term loan: Loans with original maturity
over one year.
Short-term loan: Loans with original
maturity within one year.

Changes in LTV (Total Asset Base)

77.7%

89.4%

Repayment Schedule of Interest-Bearing Debt
(As of the end of June 2016)

50.0%

43.8%

43.1%

42.8%

43.2%
40.1%

40.0%

35.0%

86.6%

Term of Interest-Bearing Debt

2.0

0.5

(*1) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as of the end of each period/year.
(*2) Average life of debt as of the end of each period/year.

45.0%

88.3%

1.0

1.20%
1.00%

4.5

3.0

1.3%

1.40%

13.4%

5.0

3.5

1.5%

As of the end of June 2016

End of FY12/2013(14th Period)

End of FY12/2014(15th Period)(*) LTV as of the end of each period/year.

End of FY12/2015(16th Period)

End of Midterm of
FY12/2016(17th Period)

After the Acquisitionof Hilton Nagoya
in Sep. 201621

(JPY M)

Borrowing

20,00018,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

18,379Investment Corporation Bond
17,20013,322 13,217 13,544
2,000

12,300 6,000
10,216

1,500

7,800

18,37913,322
2,579
2,500
79
2016

2017

2018

11,217

2019

13,5442020

10,800 11,200 10,216

2021

2022

2023

3,000

7,800

2024

0

3,000

2025

2026

1. Financial Status (Cont.)
Lender List for Interest-Bearing Debt

Status of Credit Rating (17th Period (As of the End of June 2016))(JPY M)

Lenders

Balance As of the End of
Balance As of the End ofThis Midterm Period
Previous Period(As of the End of Dec. 2015) (As of the End of June 2016)

Balance

Percentage

Balance

Percentage

Japan Credit Rating Agency, Ltd.
(JCR)

Variance

Rating and Investment Information,
Inc. (R&I)

BalanceA (outlook: positive)*As of November 26, 2015

A- (outlook: positive)*As of October 29, 2015

Sumitomo Mitsui Banking Corporation

25,052

24.4%

23,68121.2%-1,371

Shinsei Bank, Limited

13,52813.2%

13,51912.1%-9Mizuho Bank, Ltd.

13,295

12.9%

13,280

11.9%-15

Sumitomo Mitsui Trust Bank, Limited

8,096

7.9%

9,879

8.9%

1,783

Resona Bank, Limited

8,113

7.9%

8,603

7.7%

490

The Tokyo Star Bank, Limited

8,109

7.9%

8,577

7.7%

467

The Nomura Trust and Banking Co., Ltd.

3,892

3.8%

4,373

3.9%

480

Mitsubishi UFJ Trust and Banking
Corporation

1,435

1.4%

3,435

3.1%

2,000

The Hiroshima Bank, Ltd.

1,927

1.9%

2,427

2.2%

500

The Bank of Fukuoka, Ltd.

1,418

1.4%

2,410

2.2%

991

Development Bank of Japan Inc.

1,788

1.7%

2,280

2.0%

491

The Chiba Bank, Ltd.

1,734

1.7%

1,717

1.5%

-17

Aozora Bank, Ltd.

1,435

1.4%

1,435

1.3%

-

・Cope with loss on retirement of noncurrent assets resulting from renovations, etc.

945

0.9%

941

0.8%

-4

・Cope with dilution of DPU at issuance of investment units during the period

Sompo Japan Nipponkoa Insurance Inc.
Borrowing (Sub-Total)

90,772

88.3%

96,558

86.6%

5,785

2nd Investment Corporation Bond without
collateral

2,500

2.4%

2,500

2.2%

0

3rd Investment Corporation Bond without
collateral

2,000

1.9%

2,000

1.8%

0

4th Investment Corporation Bond without
collateral

1,500

1.5%

1,500

1.3%

0

5th Investment Corporation Bond without
collateral

6,000

5.8%

6,000

5.4%

0

6th Investment Corporation Bond without
collateral

-

-

3,000

2.7%

3,000

Investment Corporation Bond (Sub-Total)

12,00011.7%

15,000

13.4%

3,000

Total Interest-Bearing Debt

102,772

100.0%

111,558

100.0%

8,785

22

Issuance of Investment Corporation Bonds
Issued 6th investment corporation bonds
・Date of issuance: March 11, 2016
・Total amount of investment corporation
bonds: JPY3 billion
・Term：10 years
・Rate：0.935%

Fixed Interest Rate Ratio
As of end of
Dec. 201584.8%

As of end ofJune 2016

88.8%

Use of Negative Goodwill
・Cope with losses caused by property dispositions in order to replace properties, etc.

・Cope with inconsistency between tax and accounting treatments（Cope with amortization of fixed-term leasehold of land, amortization ofasset retirement obligations, etc.)
 JHR plans to announce by the end of FY2016 regarding its change in policy for using
negative goodwill as a result of change in the law.

Amount of negative goodwill to be
used (Jan. through Dec. 2016)

JPY736M

Forecast of balance of negative
goodwill (as of end of Dec. 2016)

JPY13.1B

VI. Market Environment

1-1. Market Environment
 Increasing number of inbound visitors supported by strong government initiatives— No. of inbound visitors: 19.7 million in 2015 vs. government target of 40 million in 2020, 60 million in 2030.
 Sizable and stable increase in domestic travel demand.

Changes in Total Overnight Guests in Japan

Changes in the Number of Inbound Visitors
Estimated total
for full year
25,006

総数
Total Number
観光客Tourists(In thousands)

550

19,737

商用客
Business Visitor

20,000No. of Japanese overnight guests(In millions)No. of inbound overnight guests

その他
Others505

18,000Visa rules were
relaxed in 2013

16,00014,00012,000Japanese government
initiated “Visit Japan
Campaign” in 2003

10,000

6,000

5,069

6,005

6,653

465

13,413439

450
10,3638,611

8,346 8,350

8,000

500

7,282

6,789

Total for Jan.
through July
14,010

8,358

414
400

28

417

474
66

33

45

432

429

2013

2014

26

18

6,218

350

4,000

386

399

413

439

2,000
0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016
1月～7月
Jan.-July

Source: Japan National Tourism Organization (JNTO)(*) Estimated total for 2016 is calculated based on the increase rate from January through July 2016

24

300
2010

2011

2012

Source: Japan National Tourism Organization (JNTO)

2015

1-2. Market Environment Overall unchanged number of guest rooms in Japan Substantial potential for improvement in ADR in spite of its recent hike

ADR and Occupancy Rates in Global Major Cities (2015)

Changes in Number of Rooms in Hotels/Ryokans in Japan
Hotels/Ryokans
90,000

Number of Hotels/Ryokans (left axis)
Number of rooms (right axis)

Thousand
Rooms(US$ )

2,000

300.0

282.3
265.2

1,575

1,555

1,562

250.0

1,544

219.8

1,500
60,00056,05954,54053,172

209.4

200.0

201.0 200.2

51,778

163.5
150.0

1,000

150.1
132.2
99.9

100.0

30,000

95.7

90.3

500

50.0

0

0
FY2011FY2012FY2013

FY20140.0
Occupancy
Rate (%)

76.5

84.8

82.2

82.5

70.0

84.6

68.9

86.7

90.8

73.7

Source: Prepared by Asset Management Company based on data of STR Global

Source: “Public Health Administration Report” by Ministry of Health, Labour and Welfare (MHLW)(*) Numbers in the vertical axis shows ADR, and STR Global
uses US$ exchange rate as of the end of December 2015.

25

75.2

71.4

1-3. Market Environment
Changes in Performance Index of Rooms Department by City
 In 2013 and 2014, RevPAR increased due to growth in both ADR and occupancy rate.
 In 2015, the growth of ADR was stronger than that of occupancy rate. RevPAR in many cities grew roughly around 20% year on year.
 In the first half of 2016, the hotel performance was mainly driven by a significant increase in ADR.
Increase rate (%) of
ADR (Average Daily Rate)2013

January – June 2016

Naha, 17.2％

Increase rate (%) of
ADR (Average Daily Rate)

26.0

21.0

Kyoto, 16.9％

21.0

16.0

Sapporo, 10.6％

Osaka, 10.9％-2.0

Hiroshima,
9.1％
0.0

2.0

-4.0

Osaka, 9.8％
Tokyo, 5.9％

6.0

8.0

10.0

12.0

-6.0

-4.0

31.0

Osaka, 20.7％
Fukuoka,
14.2％

-2.0

16.0

2.0

Hiroshima,
2.7％

4.0

6.0

2.0
Increase rate ofOccupancy Rate (%)

Osaka,
30.4％
Sapporo,19.5％

Naha, 18.6％
Tokyo,
12.5％

Kobe, 18.7％

11.0

Sapporo,
11.7％

6.0

Kobe, 5.9％
0.0

-4.0

21.0

Naha, 16.8％

1.0

0.0

26.0

16.0

Tokyo, 9.9％

2015

Increase rate (%) of
ADR (Average Daily Rate)

Kyoto, 15.6％

6.0

Sapporo, 12.0％

-4.0

2014

11.0

-2.0

Increase rate ofOccupancy Rate (%)

Kobe, 3.3％

21.0

6.0

Hiroshima, 9.3％

1.0
4.0

Increase rate (%) of
ADR (Average Daily Rate)

16.0
11.0

Fukuoka,
10.3％
Naha, 9.1％
Kyoto, 7.5％

6.0

Nagoya, 11.5％

Kobe, 2.8％

Tokyo, 11.7％

11.0

1.0

Fukuoka, 8.9％

8.0

1.0
10.0

12.0

Increase rate ofOccupancy Rate (%)-1.0

Hiroshima,
11.0％
1.0

-4.0

Source: Prepared by Asset Management Company based on data of STR Global(*) The sizes of balloons represents year-on-year growth rate of RevPAR.

26

Fukuoka,
15.0％

Kyoto, 16.6％
3.0

5.0

7.0

Increase rate ofOccupancy Rate (%)

Appendix 1
JHR’s Characteristics

1. Simultaneous Pursuit of Stability and Upside Potential
JHR pursues both stability and upside potential by steadily implementing growth strategies
Active Asset Management Strategies
Ensure stable revenue

Pursue upside
Variable rent
structure

Management
contract structure

Fixed rent structure

Revenue sharing
structure・Capital expenditures to maintain competitiveness and asset value

・Change in rent structures and rebranding
・Strategic capital expenditures

Maintain and improve rent-paying capacity of tenants, etc.

Increase in rental income, etc. through improvement
in hotels’ performance

Proportion of rental income

Proportion of rent structures

Only fixed
rent

Variablerent, etc.
Fixed rent

56%

(Forecast for end of December 2016)(Annualized)

13

44%(*)(*) Variable rent

Variablerent, etc. (*)
properties

28 properties(*) Fixed rent + variable rent structure

Revenue sharing
Income from management contracts

Fixed rent + revenue sharing structure
Variable rent structureManagement contract structure28

2. Key Points to Promote Growth
Strong ability in acquiring properties

Aim to pay higher dividend Highly recognized as Japan’s largest J-REIT specializing inhotels High presence and credibility in the property market bycontinuously acquiring properties Capability to propose various acquisition schemes andexecute acquisitions

Highcapability inachievinginternal
growthStrongability inacquiringproperties

High capability in achieving internal growth Management capability that achieves a good balance
between stability and upside potential through active
asset management strategies
 Increase in hotel revenue through collaboration withhigh-quality operators
 Attract inbound demand through enhanced international
brand portfolio

Stablefinancingcapability

 Maintain and improve competitiveness by investing inappropriate capital expenditures

Stable financing capability
 Secure sound and stable finance Diversification of financing methods29

3. External Growth Strategy
Recognition of External
Environment
Trend of the Hotel Investment

Basic Policies
 Acquire highly competitive hotel real estate for hotels, etc. in areas that have potential to attract “domestic
and inbound leisure customers” in the medium to and long-term.

Market Along with a rise in hotel revenue

 Improve profitability, stability, and quality of the overall portfolio.

due to economic recovery andincrease in domestic and inbounddemand, hotel assets are gaining
attractiveness as investment target.
In addition, since the yields of other

Key Measuresasset classes are decreasing andhotel investors are increasing,competition to acquire hotel assets



has become intense, and yields on

Emphasize the superiority of buildings and facilities (infrastructure), operations (services), and locations of hotel
real estate, etc.
•

The prime investment targets are “full-service hotels” and “resort hotels” that have high barriers to entry due to operationand management know-how, capital outlay and location.

•

In the case of “limited-service hotels,” the creditworthiness of the hotel lessee, the age of the building, location, guest
room composition and profitability are important.

•Hotels specialized in selling single rooms only are carefully chosen.

•

Especially, proactively review the purchase of hotels that have potential for internal growth by implementing active asset
management.

transactions are on a downward
trend.
 This trend is predicted to continue
for some time and transaction prices
are expected to rise further.


Strategic investment areas•

Hokkaido area, Tokyo and bay area, Osaka/Kyoto area, Fukuoka area, and Okinawa area.

Investigation and planning of the internal growth strategy upon property acquisition.
•

Investigate the appropriate rent level and rent structure upon renewal, etc., cost reduction possibilities, and possibilities toimprove buildings and facilities.

•

If the hotel pays variable rent, etc., promote internal growth through collaboration with the operators.

30

4. Internal Growth Strategy
Recognition of External
Environment
General Market Environment

Basic Policies
 Pursue both stability and upside potential by implementing active asset management strategies

 Business sentiment among Japanesecompanies is wary due to yen’s appreciation,
Kumamoto earthquake which occurred in
April 2016, growing uncertainties of world
economies after Britain’s decision to exit fromthe EU following the result of the nationalreferendum, and other factors. Although

Key Measuresindividual consumers’ confidence remains thesame, employment conditions are improving
and the nation’s economy continues torecover mildly.

Hotel Market Environment

Monitoring, planning and execution of the asset management strategy based on in-depth understanding of
the hotel business which realizes pursuit in upside revenue.
•

Make strategic investments which will improve profitability and strengthen competitiveness•

Shift to rent structures that can achieve upside revenue

number of inbound tourists, mainly from•

Attract inbound demand through rebranding to international brands

Asian countries, whose economies are•

Increase hotel revenue through collaboration with high-quality operators

 In addition to steady domestic leisuredemand, despite appreciating yen, thegrowing significantly, is continuing toincrease due to Japan’s government-led
measures to promote the country as a travel
destination. With such tailwinds for Japan’s
tourism and hotel industries, demand foraccommodation is expected to continue
strongly, driven by domestic and inbound

Planning and execution of strategic CAPEX which secure steady revenue.
•

Analyze the creditworthiness of hotel lessees, understand and improve hotel income and expenditures.

•

Maintain and increase rent-paying capacity of tenants, etc. through capital expenditures, which lead to maintenance ofcompetitiveness and asset valueleisure demand.

31

5. Financial Strategy
Recognition of the External
Environment
Continuing Favorable Environment

Basic Policies
 Ensure healthy and stable financefor Financing in Both Direct and Strengthen bank formation and relationships with financial institutions

Indirect Financing Markets

 Diversify financing methods

 Expanded investor base throughcontinuous access to both equity
and bond markets.
 Financial institutions are still positive
to provide loans.

Key Measures Due to the Bank of Japan’s monetaryeasing, short-term interest rates are
expected to be stable at a low level
over a medium term.
 On the other hand, long-term
interest rates, which are at ahistorical low, need to be paid close
attention to unforeseeable
circumstances.

 Maintain LTV level at a maximum of 50% (total asset base) for the time being
 Diversify financing methods such as public offerings and issuance of investment corporation bonds
 Improve financial stability by extending and diversifying repayment periods and fixing interest rates
 Optimize borrowing costs

32

6. Benefits Program for Unitholders
JHR offers a benefits program to unitholders to improve their satisfaction and expand the investor base.
JHR expanded the benefits program from FY2015 by adding the six Accor hotels as subject hotels for the program.
Eligible recipients of complimentary coupons

Complimentary coupons will be sent to those who hold ten or more JHR
units at the end of June every year (end of the midterm settlement).
＜FY2015＞

Subject unitholders: 14,901 unitholders
Valid period： Between Oct. 2015 and Sep. 2016

The five HMJ hotels—50% off the rack rates for hotel accommodation and 20%
discount for restaurants
The six Accor hotels—10% discount from the best-offered accommodation rates
Five complimentary coupons for accommodations and five complimentary coupons forrestaurants (*)(*) Complimentary coupons for restaurants are only available at the five HMJ hotels.



Details of the benefits program

Hotels that offer the benefits program

Record of coupon redemption (Nine months from October
2015 through June 2016)
Accommodation
No. of People
No. of Coupons
Who Used
Used
Coupons

The five HMJ hotels and the six Accor hotels

1,948 The Five HMJ Hotels

Kobe Meriken Park Oriental Hotel

Namba Oriental Hotel

Oriental Hotel Hiroshima

2,533

Restaurants
No. of People
No. of Coupons
Who Used
Used
Coupons

2,364

12,880 The Six Accor Hotels

Oriental Hotel tokyo bay

ibis Tokyo Shinjuku

Hotel Nikko Alivila

Mercure Sapporo

33

ibis Styles Kyoto Station

Mercure Okinawa Naha

ibis Styles Sapporo

Mercure Yokosuka

Appendix 2
Information on Properties

1. Property List（1/2）(As of the end of June 2016)
Appraisal ValueNo.

Property Name

Hotel Type

Grade

(*1)

(*2)

1

Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

2

Oriental Hotel tokyo bay

Full-service

No. of
Guest Location
Rooms

16th Period(as of 12.31.2015)

Acquisition
Price

Book
Value

(JPY M)）(JPY M)）(JPY M)）

(*3)

(*4)

(*5)

(*6)

Age

Appraisal
Value

CAP Rate

17th Period(as of 6.30.2016)
Appraisal
Value

Investment
Ratio

CAP Rate(JPY M)）(*7)

Revenue from
Real Estate
Operation

NOI

P/L from Real
Estate Operation(JPY1000)(JPY1000)(JPY1000)

(*8)

(*8)

(*8)

Annualized
NOI Yield(Forecast)

(*9)

319

Hyogo

21.0

10,900

10,116

13,3005.5%

14,3005.2%

4.5%

401,804

260,942

80,314

7.7%

Mid-price

503

Chiba

21.2

19,90018,57432,6004.6%

34,000

4.5%

8.3%

798,421738,141

491,835

9.1%

Osaka

20.3

15,00014,82427,0004.4%

31,700

4.3%

6.3%

744,653694,882

601,993

9.7%

3

Namba Oriental Hotel

Limited-service

Mid-price

258
(*10)

4

Oriental Hotel Hiroshima

Full-service

Upper-middle

227

Hiroshima 22.8

4,100

4,108

4,180

7.5%

4,180

7.4%

1.7%

206,441

183,225

145,365

9.6%

5

Hotel Nikko Alivila

ResortLuxury396

Okinawa

22.3

18,90018,61625,4005.3%

27,3005.1%

7.9%

487,673412,549

255,318

8.4%

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

12.3

7,610

6,874

9,070

4.9%

9,450

4.7%

3.2%

255,515

234,115

172,228

6.1%

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa 9.8

4,070

3,771

4,730

5.6%

4,990

5.3%

1.7%

147,472

135,546

94,209

6.6%

Kumamoto 8.4

2,334

2,218

2,950

5.8%

2,870

5.8%

1.0%

97,23086,271

66,369

7.3%

291

8

Dormy Inn Kumamoto

Limited-service

Mid-price

(*11)

9

the b suidobashi

Limited-service

Mid-price

99

Tokyo

29.9

1,120

1,232

1,750

4.5%

1,960

4.3%

0.5%

62,43656,93945,17510.2%

10

Dormy Inn EXPRESS Asakusa

Limited-service

Economy

77

Tokyo

19.3

999

957

1,220

4.4%

1,310

4.1%

0.4%

31,997

27,61721,453

5.5%

11

Hakata Nakasu Washington Hotel Plaza

Limited-service

Mid-price

247

Fukuoka

21.3

2,130

2,064

3,680

5.1%

4,260

4.8%

0.9%

120,000

112,000

98,000

10.5%

12Nara Washington Hotel Plaza

Limited-service

Mid-price

204

Nara

16.3

2,050

1,896

2,330

5.5%

2,460

5.2%

0.9%

75,00067,00046,000

6.5%

13

R&B Hotel Ueno Hirokoji

Limited-service

Economy

187

Tokyo

14.2

1,720

1,754

1,810

4.4%

1,950

4.1%

0.7%

48,64741,42834,883

4.8%

14

R&B Hotel Higashi Nihonbashi

Limited-service

Economy

202

Tokyo

18.3

1,534

1,521

1,960

4.9%

2,050

4.7%

0.6%

61,10352,73143,3096.9%

15

Comfort Hotel Tokyo Higashi Nihombashi

Limited-service

Economy

259

Tokyo

8.4

3,746

3,643

5,110

4.7%

5,350

4.5%

1.6%

135,057

120,258

102,420

6.4%

16

Smile Hotel Nihombashi Mitsukoshimae

Limited-service

Economy

164

Tokyo

19.3

2,108

2,051

2,850

4.5%

3,070

4.2%

0.9%

85,751

77,85968,424

6.5%

17

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

Fukuoka

14.8

1,652

1,488

2,490

5.1%

2,700

4.7%

0.7%

70,51964,02453,3297.7%

18

Hotel Keihan Universal City

ResortMid-price

330

Osaka

15.0

6,000

5,985

13,6005.5%

14,8005.3%

2.5%

631,559

593,543551,552

13.9%

19

Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

13.2

823

804

1,270

4.7%

1,410

4.5%

0.3%

38,66534,82828,952

8.7%

20

Hotel Vista Kamata Tokyo

Limited-service

Economy

106

Tokyo

24.4

1,512

1,479

1,870

4.7%

1,990

4.5%

0.6%

46,802

39,522

28,0797.1%

21

Hotel Sunroute Shinbashi

Limited-service

Mid-price

220

Tokyo

8.3

4,800

4,863

7,420

4.2%

8,510

3.9%

2.0%

245,243

216,845

206,273

7.1%

823

22

Hilton Tokyo Bay

ResortLuxury

(*12)

Chiba

28.0

26,05026,11534,4004.5%

36,000

4.3%

10.9%

940,423

790,178

708,727

6.3%

23

ibis Tokyo Shinjuku

Limited-service

Mid-price

206

Tokyo

35.8

7,243

7,537

8,830

4.4%

9,310

4.2%

3.0%

410,069

316,455

282,588

7.3%

24

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

7.3

6,600

6,742

8,590

4.6%

10,300

4.4%

2.8%

270,798

243,363

226,508

7.5%

35

1. Property List（2/2）(As of （2016年6月末時点）
the end of June 2016)
Appraisal ValueNo.

Property Name

Hotel Type

Grade

(*1)

(*2)

No. of
Guest Location
Rooms

Age

Acquisition
Book Value
Price

16th Period(as of 12.31.2015)
Appraisal
Value(JPY M)）(JPY M)）(JPY M)）

(*3)

(*4)

(*5)

(*6)

CAP Rate

17th Period(as of 6.30.2016)
Appraisal
Value

Investment
Ratio

CAP Rate(JPY M)）(*7)

Revenue from
Real Estate
Operation

NOI

P/L from Real
Estate Operation(JPY1000)(JPY1000)(JPY1000)

(*8)

(*8)

(*8)

Annualized
NOI Yield(Forecast)

(*9)

25

ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

5.9

6,797

6,766

7,940

5.3%

10,3005.0%

2.8%

269,696

210,204

174,105

8.0%

26

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

7.2

6,000

5,996

7,840

5.1%

10,0004.9%

2.5%

301,742

204,469

165,249

8.7%

27

Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

6.9

3,000

2,954

5,730

5.1%

6,880

4.8%

1.3%

216,207173,164

148,123

13.0%

28

the b akasaka-mitsuke

Limited-service

Mid-price

122

Tokyo

13.6

6,250

6,307

6,730

4.2%

6,900

4.1%

2.6%

149,809

143,814

133,492

4.7%

29

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

34.0

6,520

6,590

7,040

4.6%

7,600

4.4%

2.7%

188,222

181,456

166,883

5.5%30

the b ochanomizu

Limited-service

Mid-price

72

Tokyo

16.9

2,320

2,353

2,540

4.4%

2,650

4.2%

1.0%

55,47752,49147,7524.6%

31

the b hachioji

Limited-service

Mid-price

196

Tokyo

29.9

2,610

2,681

2,920

5.5%

3,090

5.2%

1.1%

112,230

104,218

92,1947.7%

32

the b hakata

Limited-service

Mid-price

175

Fukuoka

18.8

2,300

2,355

2,700

4.9%

3,110

4.6%

1.0%

108,235

103,627

94,0609.1%

33Hotel Francs

Full-service

Mid-price

222

Chiba

24.9

3,105

3,147

3,900

4.9%

4,070

4.7%

1.3%

150,000

133,307

109,473

7.6%

34

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa 23.7

1,650

1,658

1,760

4.8%

1,870

4.7%

0.7%

162,939

118,814103,971

10.0%

35

Okinawa Marriott Resort & Spa

ResortUpper-middle

361

Okinawa

11.4

14,95015,044

16,7005.2%

17,2005.0%

6.2%

274,999

245,153

136,8886.7%

36

ACTIVE-INTER CITY HIROSHIMA

Full-service

Luxury238

Hiroshima

5.8

17,32017,86017,9004.8%

18,4004.7%

7.2%

656,203474,369

383,934

5.3%

37

CANDEO HOTELS UENO-KOEN

Limited-service

Mid-price

268

Tokyo

6.5

6,705

6,769

6,820

4.0%

7,630

4.0%

2.8%

134,736

-

-

4.8%

38

Hotel Centraza Hakata

Full-service

Mid-price

194

Fukuoka

31.0

7,197

7,561

7,240

4.8%

7,390

4.7%

3.0%

196,364

-

-

6.5%

-

-

9,104

-

18.1

239,626

237,293

316,170

4.9％

343,3104.7％

100.0%

9,390,971

-

-

7.1%

Total or Average(*1) Under the category of Hotel Type, “Full-service” is full-service hotel, “Resort” is resort hotel, and “Limited-service” is limited-service hotel.
(*2) Mainly based on ADR, etc., JHR has classified the hotels into four categories as “luxury,” “upper-middle,” “mid-price,” and “economy.”(*3) Average age: The sum of (acquisition price of each property x property age ) ÷Total acquisition price.
(*4) The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust or Real Estate Purchase & Sale Agreement is indicated. (Consumption tax, amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)(*5) Book value as of the end of June 2016.
(*6) No. 37-38 are appraisal value at the time of acquisition.
(*7) Percentage of the acquisition price of the each asset to the total acquisition price. Numbers beyond one decimal place is rounded off.
(*8) Actual for six months from January through June 2016. Since the lessees did not agree to disclose numbers in units of JPY1000 for Nos. 11 and 12, amounts are rounded down to the nearest JPY 1M. Also, NOI and P/L from Real Estate Operation of Nos. 37 and 38 are not shownsince they were acquired during the period.
(*9) Annualized NOI Yield (Forecast) is a forecast as of the end of December 2016. Also the total annualized NOI yield is calculated as follows：Annualized NOI for FY12/2016 (forecast) ÷ total acquisition price of properties held as of the end of FY12/2016 (anticipated).
(*10) The number of guest rooms of Namba Oriental Hotel is changed from 257 to 258 on February 2, 2016.
(*11) The number of guest rooms of Dormy Inn Kumamoto is changed from 294 to 291 on April 1, 2016.
(*12) The number of guest rooms of Hilton Tokyo Bay is changed from 818 to 823 on April 30, 2016.

36

2. Summary of Lease Contracts (1/2)(As of the end of June 2016)
No．

Property Name

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Oriental Hotel Hiroshima

Lease Type

Rent Structure(*1)

Fixed-lease

Fixed+Variable

Hotel Nikko Alivila

6

The Beach Tower Okinawa

Fixed-lease

Fixed

7

Hakone Setsugetsuka

Fixed-lease

Fixed

Dormy Inn Kumamoto

9
10

8

4

20

10

JPY42M/month20

10

JPY24M/month

Okura Nikko
HotelManagement
Co., Ltd.

Kyoritsu MaintenanceCo., Ltd.

Contractual Rent(*3)

(Fixed rent)
JPY3,221M/year(Variable rent) When the
total GOP of the five HMJ
hotels exceeds GOP baseamount (JPY3,351M), theexcess x 85% is paid.

Hotel Management Japan Co.,
Ltd.

5

8

LesseeHotel
Remaining
Operator/Hotel Lease / Contract
Consulting andMC
TermManagement
Term
(*2)
Company

Jan. 2016

Structure ismodified.

－

－

－

－

－

－

－

－

－

－

－

－

－
－

－

To be expired(March)－Rent can be modified throughmutual agreement.

Apr. 2015

Contract isrenewed. (same)

－

－

To be
expired(March)

JPY11M/month

Rent can be modified throughmutual agreement.

－

－

－

－

－

JPY8M/month

Rent can be modified throughmutual agreement.

Apr. 2011 Increased (+3.0%)

－

－

－

JPY5M/month

Lease

Fixed

3

2

JPY20M/month

11 Nara Washington Hotel Plaza

Lease

Fixed

20

4

12 R&B Hotel Ueno Hirokoji

Lease

20

6

Fixed

2018

Same

1

Washington Hotel K.K.

2017

Apr. 201220

Hakata Nakasu Washington
Hotel Plaza

2016

－

Fixed

Lease

Condition(*4)－

JPY16M/month

Dormy Inn EXPRESS Asakusa

The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
Rent can be modified throughmutual agreement every three
years.
Rent can be modified throughmutual agreement every three
years.

Timing

－

7

Fixed

In principle, the same rent will beapplied until expiration of thecontract.

Rent Modification Schedule（2016～2018）

To be
discussed(April)12

Fixed-lease

Rent Summary

Rent Modification Summary(Acquisition to End of June 2016)20

2

JPY10M/month

Rent can be modified throughmutual agreement.

Apr. 2013

Same

－

－

To be
expired(March)Greens Co., Ltd.

20

12

JPY21M/month

Rent can be modified throughmutual agreement every five years.

Jan. 2013

Same

－

－

To be
discussed(January)

Fixed +Revenue
sharing

The Kamogawa Grand Hotel,
Ltd.

20

1

JPY11M/month +Revenue sharing

Rent can be modified throughmutual agreement.

Apr. 2014

Structure ismodified.

－

To be expired(March)－13 R&B Hotel Higashi Nihonbashi

Lease

Fixed

14

Comfort Hotel Tokyo Higashi
Nihombashi

Fixed-lease

Fixed

15

Smile Hotel Nihombashi
Mitsukoshimae

Lease

16 Toyoko Inn Hakata-guchi Ekimae

Lease

Fixed

Toyoko Inn Co., Ltd.

30

15

JPY11M/month

No rule has been stipulated.

Oct. 2007 Increased (+9.4%)

－

－

－

17 Hotel Keihan Universal City

Lease

Fixed+Revenue
sharing

K.K. Hotel Keihan

20

5Nondisclosure

Nondisclosure

Jul. 2014－－－

Fixed-lease

Variable

Solare Hotels & SHR Hotels,
Resorts Co., Ltd.
Co., Ltd.

5

1Hotel GOP x 85% (If it isbelow zero, it will be JPY0.-)－

To be expired(June)－

19 Hotel Vista Kamata Tokyo

Lease

Fixed+Revenue
sharing

Vista Hotel Management
Co., Ltd.

4

3Structure ismodified.
Structure ismodified.
Contract isrenewed (Modify
the calculation
method ofrevenue sharing.)

－

－

To be
expired(December)

20 Hotel Sunroute Shinbashi

Fixed-lease

Fixed+Revenue
sharing

Sunroute Co., Ltd.

15

21 Hilton Tokyo Bay

Fixed-lease

Fixed+Revenue
sharing

4

18 Chisun Inn Kamata

THE DAI-ICHI
BUILDING CO.,LTD.

HiltonInternational
Company-

Jul. 2012

JPY7M/month +Revenue sharing

In principle, the same rent will beapplied until expiration of thecontract.

Jul. 20157

JPY18M/month +Revenue sharing

No rule has been stipulated.

－

－

－

－

－

3

JPY157M/month +Revenue sharing

Rent can be modified throughmutual agreement.

Jul. 2015

Contract isrenewed.

－

－

To be
expired(December)37

2. Summary of Lease Contracts (2/2)(As of the end of June 2016)
No．

Property Name

Lease Type

22 ibis Tokyo Shinjuku-

23 ibis Styles Kyoto Station-

24 ibis Styles Sapporo-

25 Mercure Sapporo-

26 Mercure Okinawa Naha
27 Mercure Yokosuka

Fixed-lease

Rent Structure(*1)
Management
contract
Management
contract
Management
contract
Management
contract
Management
contract
Variable

28 the b akasaka-mitsuke

Fixed-lease

Fixed+Variable

29 the b ikebukuro

Fixed-lease

Fixed+Variable

30 the b ochanomizu

Fixed-lease

Fixed+Variable

31 the b hachioji

Fixed-lease

Fixed+Variable

32 the b hakata

Fixed-lease

Fixed+Variable

33 the b suidobashi

Fixed-lease

Fixed+Variable

34 Hotel Francs

Fixed-lease

Fixed

35 Okinawa Marriott Resort & Spa

Fixed-lease

Lessee－HotelOperator/Hotel
Consulting andManagement
Company

AAPC Japan K.K.

AAPC Japan K.K.
Ishin Akasaka
Operations, K.K.
Ishin Ikebukuro
Operations K.K.
Ishin Ochanomizu
Operations K.K.
Ishin Hachioji
Operations, Y.K.
Ishin Hakata
Operations K.K.
Ishin Suidobashi
Operations K.K.
K.K. Bridal Produce

Candeo Hospitality
Management, Inc.

Fixed-lease

Fixed+Variable

Hotel Centraza Co., Ltd.

2017

2018

Jul. 2012

－

－

－

5

3

－

－

－

－

5

3

Amount equivalent to hotel GOP-

Dec. 2014

Structure ismodified.

To be expired(December)

－

－

－

15

13

Amount equivalent to hotel GOP

-

－

－

－

－

－

-

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

8

Amount equivalent to hotel GOP

3

Linked to hotel GOP

7

6

JPY102M/year +Linked to hotel GOP

The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.

7

6

JPY163M/year +Linked to hotel GOP

The same rent will be applied until
expiration of the contract.

－

－

－

－

－

7

6

JPY69M/year +Linked to hotel GOP

The same rent will be applied until
expiration of the contract.

－

－

－

－

－

6

JPY98M/year +Linked to hotel GOP

The same rent will be applied until
expiration of the contract.

－

－

－

－

－

7

6

JPY82M/year +Linked to hotel GOP

The same rent will be applied until
expiration of the contract.

－

－

－

－

－

5

4

JPY85M/year +Linked to hotel GOP

Jul. 2015

Rebranded

－

－

－

19

8

JPY25M/month

The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.

－

－

－

－

－

5

(Fixed rent)
JPY550M/year
In principle, the same rent will be(Variable rent)
applied until expiration of the
When the total GOP exceeds GOP
contract.
base amount (JPY700M), the excess
x 90% is paid.

－

－

－

－

－

－

－

－

－

－

－

－

Renewed
(*6)

－

－

－

－

－

－

－

5

7

14

Fixed

2016

-

20

Fixed-lease

Condition(*4)
Structure ismodified.

-11

37 CANDEO HOTELS UENO-KOEN

TimingRent Modification Schedule（2016～2018）

Amount equivalent to hotel GOP

11

Fixed+Variable

Rent Modification Summary(Acquisition to End of June 2016)

Amount equivalent to hotel GOP

Lagoon resort Nago Co., Ltd.
(*5)

Fixed-lease

Rent Summary

8

Fixed+Variable

36 ACTIVE-INTER CITY HIROSHIMA

Contractual Rent
(*3)

12

10

K.K. A.I.C Hiroshima
Management

38 Hotel Centraza Hakata

Remaining

Lease / Contract
Term
MC Term(*2)54(*1) Rent structure is as follows:
Fixed: Fixed rent
Variable: Variable rentManagement contract: Management contract
Fixed + Variable: Property paying both fixed and variable rent
Fixed + Revenue sharing: When the sales of the hotel (lessee) exceed pre-determined amount, additional rent is paid.
(*2) Remaining contract term as of the end of June, 2016(*3) Amount including car park and CAM without tax.

3

(Fixed rent)
JPY348M/year
In principle, the same rent will be(Variable rent)
applied until expiration of the
When the total GOP exceeds GOP
contract.
base amount (JPY468M), the excess
x 82.5% is paid.
Rent can be modified throughNondisclosure (*6)
mutual agreement every three
years.
(Fixed rent)
JPY400M/year
In principle, the same rent will be(Variable rent)
applied until expiration of the
When the total GOP exceeds GOP
contract.
base amount (JPY425M), the excess
x 90% is paid.

(*4) Details of “Modified Structure” is as follows.
No. 1 to No. 5: Variable rent was modified from 81.5% to 85%.
No. 15, 17: Revenue sharing structure has been applied in addition to fixed rent.
No. 18: Fixed rent has been replaced with the variable rent due to the replacement of the lessee.
No. 22, 24: JHR has commenced direct management contract structures.
(*5) The agreement of hotel operation support by Solare Hotels & Resorts Co., Ltd. expired on March 31, 2016.
(*6) Information is undisclosed since the lessee did not agree to disclose the rent in the agreement of rent renewal.

38

3. Portfolio Map
Total Assets

3

2

1

5

4

6

7

8

Limited-service hotel

JPY286.8 Billion

Full-service hotel
Resort hotel
25

26

No. of Hotels

41 Hotels
No. of Guest Rooms

10,138 Rooms
3

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

910

the b suidobashi

Dormy Inn
EXPRESS Asakusa

Namba Oriental
Hotel

Oriental Hotel
Hiroshima

11

Hotel Nikko
AlivilaHakone Setsugetsuka

Dormy Inn
Kumamoto

16

13

14

15

R&B Hotel
Ueno Hirokoji

R&B Hotel Higashi
Nihonbashi

Comfort Hotel Tokyo Smile Hotel NihomHigashi Nihombashi bashi Mitsukoshimae

12

Hakata Nakasu
Nara Washington
Washington Hotel Plaza Hotel PlazaThe Beach Tower
Okinawa

17

18

19

20

21

22

23

24

Toyoko Inn
Hakata-guchi Ekimae

Hotel Keihan
Universal City

Chisun Inn Kamata

Hotel Vista
Kamata Tokyo

Hotel Sunroute
Shinbashi

Hilton Tokyo Bay

ibis Tokyo
Shinjuku

ibis Styles
Kyoto Station

24
31
2 33

18 39
7

32 38 40

26

27

28

29

30

31

32

ibis Styles Sapporo

Mercure Sapporo

MercureOkinawa Naha

the b akasakamitsuke

the b ikebukuro

the b ochanomizu

the b hachioji

the b hakata

22

34

11 17

25

41

8

1
4 36

12

Tokyo 23 wards

33

34

35

36

Hotel Francs

Mercure Yokosuka

Okinawa Marriott
Resort & Spa

ACTIVE-INTER CITY HIROSHIMA CANDEO HOTELS(Sheraton Grand Hiroshima Hotel) UENO-KOEN

37

38

30
29

13 37

5
35

6

10

9
23
16
21

27

14 15

NEW

28

39

40

41

19
20

HOTEL VISTA GRANDE OSAKA(Holiday Inn Osaka Namba) (Anticipated)

39

HOTEL ASCENT FUKUOKA Hilton Nagoya(to be acquired in
September 2016)

Hotel Centraza Hakata

Appendix 3
Investors Composition and Investment Unit Price1. Major Unitholders and Unitholders of Investment Units
Top Ten Major Unitholders
 As of the End of December 2015

 As of the End of June 2016

Name

Ranking

No. of Units Percentage(*)

Name

Ranking

No. of Units Percentage(*)

1 Japan Trustee Service Bank, Ltd. (Trust)

540,062

17.17

1

Japan Trustee Service Bank, Ltd. (Trust)

515,357

15.51

2 The Master Trust Bank of Japan, Ltd. (Trust)

417,042

13.26

2

The Master Trust Bank of Japan, Ltd. (Trust)

391,418

11.78

3 Trust and Custody Services Bank, Ltd. (Securities Investment Trust)

330,953

10.52

3

Trust and Custody Services Bank, Ltd. (Securities Investment Trust)

318,754

9.59

4 Nomura Bank (Luxembourg) S.A.

128,733

4.09

4

Nomura Bank (Luxembourg) S.A.

179,316

5.39

5 The Nomura Trust and Banking Co., Ltd. (Investment Trust)

120,438

3.83

5The Nomura Trust and Banking Co., Ltd. (Investment Trust)

137,273

4.13

6 Shikoku Railway Company
NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NON
7LENDING 15 PCT TREATY ACCOUNT
8 State Street Bank & Trust Company 505001

58,311

1.85

6State Street Bank & Trust Company 505001

60,121

1.80

57,4361.82

758,3111.75

50,662

1.61

8

53,7891.61

9 Nomura PB Nominees TK1 Limited

38,2691.21

9Shikoku Railway Company
NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NONLENDING 15 PCT TREATY ACCOUNT
Goldman Sachs International

47,020

1.41

10 NOMURA PB NOMINEES LIMITED OMNIBUS-MARGIN (CASHPB)

37,6991.19

10 Nomura PB Nominees TK1 Limited

38,2691.15

1,779,605

56.59

Total

1,799,628

54.17

Total

(*) The total units held by each investor to the total units issued by JHR as of the end of December 2015 and the end of June 2016. (Rounded off to two decimal places.)

Owners of the Investment Units As of the End of December 2015
OwnersIndividuals and Others
Financial Institutions(including Securities Firms)

Other Domestic Firms
Foreign Firms andIndividuals
Total
Individuals
and Others

No. ofInvestors

No. of Units

24,441

368,839112
353

 As of the End of June 2016
No. of Investors

1.4%
0.4%

No. of Units

1.0%

1,627,971

32.5%

124,108276

1,023,309

25,182

3,144,227

Financial Institutions(including Securities
Firms)

97.0
%

3.9%

OwnersIndividuals and Others

11.7%

Financial Institutions(including Securities Firms)

Other Domestic
Firms
Foreign Firms andIndividuals

51.7
%

Total
Other Domestic
Firms

No. of Investors

No. of Units

26,642

371,109126

1,646,530

368

126,662306

1,177,606

27,442

3,321,907

No. of Investors
0.4%

No. of Units

1.3%
11.1%
1.1%
35.4%
49.5%
97.0%
3.8%

Foreign Firms
and Individuals(*) Percentage of investors is percentage of owners in each segment to the total number of investors in JHR, and percentage of investment units is percentage of investment units owned by each segment to the total investment units
issued. (Both rounded off to one decimal place.)41

2. Changes in Investment Unit Price and Market Capitalization
Changes in the investment
unit price and market capitalization(Based on the closing price) (JPY)7/2016
Market Capitalization

Investment Unit Price of JHR

PO (*2) JPY14.6B

110,000
Price of the investment unit:
JPY86,200.-

1/201590,000PO (*2) JPY15.6B(Based on the closing price of July 29, 2016)
(*1)

(*2)

6/2015100,000

Total market capitalization:
JPY323.2B
Price of the real estate investment securities may
fall depending on the fluctuations of price of thereal estate under management or profitability,
etc., and investors may suffer losses. Investors
may also suffer losses through the bankruptcy ordeteriorated financial condition of the issuer.
With reference to the risk of investment in JHR
units, see Securities Registration Statement of
JHR dated July 7, 2016.
Includes OA.

1/2016

PO (*2) JPY10.7B

450,000

350,000

80,00070,00060,00050,0009/2012
PO (*2) JPY5B

4/20139/2014300,000

PO JPY20.5B

PO JPY10.1B

250,000
200,000

40,000150,000

30,000100,000

20,00050,00000600
Investment Unit Price of JHR

TSE REIT Index

500(*) 100 is the closing price of JHR unit, REIT
index and TOPIX at TSE dated April 2,
2012. REIT Index of TSE is an index of aweighted average of the market
capitalization of all REITs listed on TSE.

(JPY M)

400,000

10,000Comparison with REIT Index and
TOPIX of Tokyo Stock Exchange (TSE)PO JPY33.8B

400

300

200

100

0

42

TOPIX

Appendix 4
Summary of the Asset Management Company

1. Summary of the Asset Management Company
Company

Japan Hotel REIT Advisors Co., Ltd.

Location

Ebisu Neonato 4F, 4-1-18 Ebisu, Shibuya-ku, Tokyo 150-0013

Establishment

August 10, 2004

Capital

JPY300M as of June 30, 2016

Shareholders

Rockrise Sdn Bhd, Kyoritsu Maintenance Co., Ltd., ORIX Corporation

Representative Director

Hisashi Furukawa

Registration and Licenses

Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (3) No. 83613
Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38
Financial Instruments Trading Company, Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trusts Association, Japan

Organization Chart

Shareholders’ Meeting
AuditorBoard of Directors’ Meeting

Investment (and Operation)
Committee

Compliance Committee
Representative Director
Compliance Office

Investment Division

Asset Management

Operations Division

Finance & Planning Division

Acquisitions

Finance & Planning44

Accounting &ReportingGeneral Affairs

Investor
Relations2. Features and Governance of the Asset Management Company
Features of the Asset Management Company【1】

Mission Statement
We continue challenge and creation, and provide you with attractive hotel investment opportunities.

【2】 Advanced ExpertisePlanned and executed unprecedented measures for the asset management of JHR.



Extensive experience, planning and execution abilities in renovation or rebranding through collaboration with hotel lessees orhotel operators, etc.

Good and long-term business relationships with many hotel lessees and hotel operators.

Ensure managerial independence from the main sponsor (*1) and commitment to the growth of JHR.

Rule to Prevent Conflict of Interest in Dealing with Sponsor-Related Persons
Strict decision-making rules including those detailed below have been set for dealing with “sponsor-related persons.”(*2) In order to prevent conflict,
we strive to comply with arms-length rules and ensure transparent deals.

Asset Management Company: Compliance Committee

JHR: Board of Directors

The compliance committee consists of committee members

including outside specialists, and approval of transactions under

not have any relationship with the sponsors-related persons.

deliberation in principle requires the attendance of the outside

specialists.
The board of directors consists of third-party members who do
All deals involving sponsor-related persons in principle needapproval of the board of directors.

In principle, outside specialists are authorized to dismiss proposals.

（*1）No employee of the asset management company is a seconded employee of the main sponsor, RECAP group, except for part-time directors.
（*2）Definition of “sponsor-related person” is broader than the “interested party” stipulated by law. All investors of the asset management company and its subsidiary company, etc. are considered as sponsor-related persons.

45Disclaimer
This material is prepared and provided solely for the purpose of providing information and not to offer, solicit, or do business, etc. with specific products
including purchase of investment units, investment unit subscription rights, or investment corporation bonds of Japan Hotel REIT Investment Corporation (“JHR”)
or any other particular products. If any discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail.
This material is neither a disclosure document nor an investment report required under or prepared pursuant to the Financial Instruments and Exchange Act, Act
on Investment Trusts and Investment Corporations and related government ordinances, Cabinet Office regulations, listing rules by Tokyo Stock Exchange,
Regulations of The Investment Trusts Association, Japan or other related rules and regulations.
This material contains forward-looking statements about financial conditions, operational results, and businesses of JHR, as well as plans and intentions of JHR
and its asset management company, Japan Hotel REIT Advisors Co., Ltd (“JHRA”). Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results or performance of JHR to materially differ from those expressed or implied forecasts. Those
forecasts are made based on JHR’s present and future business strategies and assumptions relating to the political and economic circumstances surrounding
JHR in the future.
Every effort has been made to ensure the accuracy of the information contained in this material. However, there can be no assurance that the information isaccurate, complete, appropriate or fair. The information may be revised or retracted without prior notice.
Regarding the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, financial institutions may charge
you pre-determined handling fees and other charges aside from the price of the investment units, investment unit subscription rights or investment corporation
bonds. Since neither JHR nor JHRA handles the offering and trading of investment units, investment unit subscription rights or investment corporation bonds,
please ask financial institutions for the amount, upper limit, and calculation methods of such fees and other charges.
JHR mainly invests in real estate-related assets, primarily hotels which are subject to change in values. Therefore, unitholders, holders of investment unit
subscription rights and investment corporation bonds may suffer losses due to economic conditions of the real estate market or securities market, economic
situations including interest rate environment, the nature of investment units or investment unit subscription rights, dependency on mechanisms and related
persons of investment corporations, changes in legal systems related to real estate (such as tax regulations and building regulations), damage caused to the realestate-related assets by natural disasters, fluctuation in prices or profitability of the real estate-related assets, nature of the trust beneficiary rights undermanagement, delisting of the investment units, or worsening financial position or insolvency of JHR. For details, please refer to the Articles of Incorporation,
Securities Registration Statement, Annual Securities Report and Extraordinary Report of JHR.
The contents of this material may not be copied or reproduced without our prior permission.
Japan Hotel REIT Advisors Co., Ltd.
Financial Instruments Trading Company
Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trust Association, Japan46